The ongoing war between Iran and Israel and America’s active role in it has put the world oil market in deep crisis. This war has had the biggest impact on the prices of petrol and diesel. According to international reports, fuel prices have increased in at least 85 countries and in many countries this increase has reached 15 percent to 50 percent.
This turmoil in the oil market has come at a time when the world was already struggling with economic slowdown and inflationary pressure. The Middle East is an important center of global oil supply and any military tension here impacts the entire world’s energy market. This is the reason why this war has further increased global inflation and economic uncertainty.
Which countries are most affected?
The sharpest rise in fuel prices has been recorded in those countries which are more dependent on imports or where economic imbalance already existed. Due to increase in transportation costs in many countries, the prices of food and essential goods have also seen a rise.
Impact on petrol and diesel prices in major countries (estimated range)
Country Price increase (%) Main reasons
Cambodia 68% (highest) post-war import costs surge, limited energy buffer
Vietnam 50% oil supply uncertainty, regional market pressure
Mishra 35% – 50% energy import bill more than doubled
Nigeria 35% import dependence and currency pressure
Laos 33% weak energy reserves and supply constraints
Canada 28% Global market fluctuations and refining costs
Australia 15% – 25% inflation and possibility of negative impact on GDP
Many countries in Europe face 20% – 40% energy supply uncertainty, rise in gas-oil costs.
Africa’s importing countries face 25% – 45% currency pressure and increase in import costs.
Some markets in Asia face 15% – 30% transportation costs and impact of global oil prices
The biggest economic pressure on Egypt
The most obvious impact of the rise in global prices has been seen on Egypt. According to reports, the country’s energy import bill has more than doubled. This means that additional pressure on the government’s budget, currency and foreign exchange reserves may increase. The impact of increase in energy costs is not limited to fuel only. Electricity rates, industrial production costs and public transport expenses are also affected by this. This has a direct impact on the livelihood of common people.
Concern even in developed economies
This crisis is not limited to developing countries only. Developed countries like Australia are also worried about its impact. The Treasury analysis there has indicated that the war may increase inflation and have a more negative impact on economic growth than expected. Volatility in oil prices has also increased concern in global markets. There are fluctuations in stock markets and pressure in currency exchange rates. Many central banks are now adopting a cautious stance regarding their policies.
managed shock strategy
The biggest impact of rising prices of petrol and diesel falls on common consumers. With increasing transportation costs, prices of food items and things used every day also increase. This leads to a sharp rise in the cost of living, which has a greater impact on the middle and lower income groups. This situation can be challenging even for a big importing country like India. If the rise in global prices continues for a long time, pressure on domestic inflation may increase. Although governments can try to provide relief by taking steps like tax cuts or subsidies, it is not easy to completely avoid the influence of the international market. India is also not untouched by the rise in global oil prices after the Iran-Israel war, because the country imports about 85 percent of its total crude oil requirement. However, till now India has adopted the strategy of handling this shock as a managed shock. That is, instead of putting the entire burden directly on consumers, the impact is being controlled through policy balancing.
Relationship between global tension and oil market
There is a deep connection between the Middle East conflict and the global energy market. It has been seen many times in history that increasing tension in this region has affected oil prices. The current war has once again made it clear to what extent the global economy is dependent on energy supply. If the conflict prolongs, oil prices may rise further. This is likely to slow down global economic growth, increase inflation and have a negative impact on trade. At present, the eyes of the world are fixed on the developments in the Middle East, because its impact is not limited only to diplomacy or military strategy, but has reached the lives of common citizens of every country.
